Sorry for another DLVS acquisition thread. Moderators please delete if necessary. However, it has long been speculated on here that it was highly unlikely that VS (like IT) would ever take the A380's they had on order. The passenger numbers were never there to support that capacity.

However, if the JV deal between DL and VS gets done and dusted, is it now more likely that VS might actually take those planes? Most of you are smarter than me when it comes to projecting or predicting capacity, but I could see if the JV starts going well and is able to generate more passengers (through new corporate or non-corporate deals) places like LAX could possibly take a VS A380 with enough domestic feed on the US and possibly UK side.

That would mean that DL would effectively be selling seats on two (AF and VS) A380s!

Okay, if you don't work in finance, I can understand how the lingo is confusing. But Delta did AQUIRE a 49% stake in VS. Thus an AQUISITION took place. The term AQUISITION does not necessary connote a majority stake was taken. It means ownership was taken.

Question: why would DL favour VS acquiring A380 more than the previous minority shareholder? SIA seems very happy with A380. They have a lot of operating data from which they would have a good idea of the economics TATL.

The only reason why there was no "majority change in ownership" is because international laws prohibit a foreign carrier from having a majority ownership. Also the reason why VS doesn't own VAustralia or VX, but you know for damn sure SRB has a voice in every single thing either carrier does.

Quoting TeamInTheSky (Reply 3):Okay, if you don't work in finance, I can understand how the lingo is confusing. But Delta did AQUIRE a 49% stake in VS. Thus an AQUISITION took place. The term AQUISITION does not necessary connote a majority stake was taken. It means ownership was taken.

Regards,

Team

Sorry. But while they acquired a 49% ownership of VS, DL did not complete an acquisition of VS. That would require a take over (whether friendly or hostile) of a majority, if not all, of the company and it's assets. DL has specifically stated that they will fly flights based on metal neutrality and this being solely a JV type deal. The brand of VS will not be going away any time soon as it's still in majority control of SRB.

Quoting xjramper (Reply 12):Sorry. But while they acquired a 49% ownership of VS, DL did not complete an acquisition of VS. That would require a take over (whether friendly or hostile) of a majority, if not all, of the company and it's assets.

I wish people would stop calling this a Merger or Acquisition. While they did technically acquire a piece of VS, the team "acquisition" is typically representative of a complete acquisition of the company, which isn't what happened here. DL has no more/less power than SQ had. They own a minority stake with three seats on the board (I believe SQ also had three seats). The only difference here is that I'd expect to see DL do more with their investment than SQ did. Hopefully we'll see better collaboration, and a more concerted effort to benefit both carriers. SQ was really just a silent investor and didn't do much to help/hurt VS.

I doubt DL's three seats would affect VS fleet planning that much. They may have access to better resources now, and be able to make better decisions (if DL is open with operating metrics), but I doubt DL has the power to sway VS away from or to a specific airframe.

Quoting xjramper (Reply 12):Sorry. But while they acquired a 49% ownership of VS, DL did not complete an acquisition of VS. That would require a take over (whether friendly or hostile) of a majority, if not all, of the company and it's assets. DL has specifically stated that they will fly flights based on metal neutrality and this being solely a JV type deal. The brand of VS will not be going away any time soon as it's still in majority control of SRB.

Quoting vgnatl747 (Reply 13):the team "acquisition" is typically representative of a complete acquisition of the company, which isn't what happened here. DL has no more/less power than SQ had. They own a minority stake with three seats on the board (I believe SQ also had three seats). The only difference here is that I'd expect to see DL do more with their investment than SQ did. Hopefully we'll see better collaboration, and a more concerted effort to benefit both carriers. SQ was really just a silent investor and didn't do much to help/hurt VS.

Another thread derailed by semantics. Do either of you suspect that VS will come to operate an A380? Or shall we continue to discuss if DL's 49% acquisiton of VS shares is misstated?

The question of whether or not VS will ever take delivery of their A380 order is based on the assumption that VS do not have the market numbers to reliably fill these aircraft profitably.

The VS fleet consists of 44 aircraft, of which 13 are B744. So the A380 is quite the jump in overall capacity. (6 plus 6 options)

The DL purchase of the SQ 49% shareholder gives them seats on the board and opens the way for a DL/VS joint venture across the Atlantic. So if this deal works out then yes we could see VS getting a greater share of the US/UK market. However the A380 order was placed before this deal, so the business case must have been in place for them to order the A380.

The order was placed when there was a sales rush similar to the 747 rush.. later some airlines realized they were over extended without a sufficient customer base.. in this case Branson's ego probably prompted the order.

IMHO the 4 powered A380 is perfect for airlines flying very long routes as SIN-LHR or SYD-LAX. According to their timetable these airlines send the doubledecker to other shorter routes to maximize the schedules. For Virgin + Delta operations from LHR the routes to JFK, ATL or even LAX don't seem long enough.

Quoting kanban (Reply 16):The order was placed when there was a sales rush similar to the 747 rush.. later some airlines realized they were over extended without a sufficient customer base.. in this case Branson's ego probably prompted the order.

Rather wrong - simply nobody at VS or elsewhere expected the world economy to plunge into this horrendous recession. That's all. No ego involved. Buying planes is a very long-term decision - unfortunately nobody has a crystal ball...

I'm not sure about the dissent on this argument but this is what I was thinking, especially since DL now has 3 seats on VS's board

Right, but not the one SRB sits in.

I think we need to consider some facts:

1) VS pilots are trained for Airbus aircraft
2) Airbus has a chunk of VS money as deposits for the A380s

which makes purchase of Airbus products far more likely than 777s.

People are over-emphasizing what role DL will play. They can't ever control VS, and they can sell off their shares just like SQ just did, so VS is not going to let DL ingest them. VS will remain a stand-alone entity.

Both sides hope the JV will pump money into both entities' hands, but that's about it.

If it does, I'm convinced we'll see VS buying new Airbus products, almost certainly A350s.

Certainly I can see VS buying A350s but not the 380. If anything they go with the 747-8's as a replacement of 744's & A346's still in the fleet. That would also fit with a possible DL buy of the 747-8 for the NWA 744's they inherited. Maybe they announce a joint buy of 747-8's & A350's by spring.

It's very likely that VS has the right to ask Airbus to refund that money without penalty given the lengthy A380 delays.

Quoting VS11 (Reply 20):simply nobody at VS or elsewhere expected the world economy to plunge into this horrendous recession. That's all. No ego involved. Buying planes is a very long-term decision

I'd also argue that no one at VS in 2000 thought that Bermuda II would be gone within a decade. VS's position as one of the four carriers permitted to have a substantial presence between LHR & the U.S. has been eroded with the rise of the global alliances and the entry of all the U.S. legacy carriers into LHR.

Quoting TeamInTheSky (Reply 14):Another thread derailed by semantics. Do either of you suspect that VS will come to operate an A380? Or shall we continue to discuss if DL's 49% acquisiton of VS shares is misstated?

Regards,

Team

Au contraire, you have to know the definition of what actually happened in order of how to appropriately respond to the question at hand.

If DL acquired VS, then DL would be calling the shots, not VS/SRB, therefore the A380 would almost be placed on the back burner or changed as DL's model doesn't require that type of aircraft in their fleet. Look at the 787 order that NW had on order prior to the merger back in 2007. DL has no intention of bringing that aircraft into the fleet, since they deferred the order again until closer to 2020. Same would apply to the A380, albeit in a different capacity (no pun intended).

But since there hasn't been a change of leadership or ownership, and has been stated above, VS has a bunch of money invested in the purchase of A380s. The only thing that has changed will be the addition of joint DL and VS flight numbers and reciprocal frequent flyer benefits.

Quoting rwy04lga (Reply 24):Quoting xjramper (Reply 12):
The brand of VS will not be going away any time soon as it's still in majority control of SRB.

Actually, it's the other way around...SRB is in majority control of VS.

I think the fact that DL has acquired 49% of VS is irrelevant to the A380 question. DL would like VS to be profitable, and twins are far less of a risk than the A380.

VS relies heavily on O&D traffic, unlike BA who have far more connecting traffic through LHR. VS would buy A380s if they could fill them, year round, with good yields. I don't think there are any destinations that could achieve this aim, let alone occupy 6-12 A380s. Maybe they could offload the order to BA and stick with the 787-9, or more likely convert to A350.

Quoting ScottB (Reply 26):Quoting VS11 (Reply 20):
simply nobody at VS or elsewhere expected the world economy to plunge into this horrendous recession. That's all. No ego involved. Buying planes is a very long-term decision

I'd also argue that no one at VS in 2000 thought that Bermuda II would be gone within a decade. VS's position as one of the four carriers permitted to have a substantial presence between LHR & the U.S. has been eroded with the rise of the global alliances and the entry of all the U.S. legacy carriers into LHR.

Yes, I agree - opening up LHR did impact obviously the capacity question but in general my idea was that the A380 decision had been made long time ago in a very different world.

Quoting Revelation (Reply 33):Ok, should have said "many" or some such. Their wiki page has their fleet at 31 Airbus vs 13 744s, but I'm sure yourself or someone else will come along and correct me if I'm wrong!

And soon the 787s of course.

I do have to wonder though, if VS is in the same position TG was; that they signed a contract that will not let them change models.

Quoting Revelation (Reply 28):Both Airbus and VS have been very coy about the exact status of that order

Airbus seems incredibly reluctant to ever cancel orders unless it's absolutely necessary to do so. They're still showing orders for 5 A350-800's and 5 A380's for Kingfisher and I think it's more likely that WN will operate A380's than IT. The undelivered A340-500 orders for IT were cancelled because the program was being terminated; the same is true of the FX and 5X orders for the A380F. Not that the flexibility on Airbus's part is bad for the customer at all -- I just give a bit less credence to the existence of the order if it seems unlikely that the customer will really take delivery. And the A380 delays most likely gave VS the right to cancel without penalty, just as the 787 delays provided the same opportunity for Boeing's customers. With the issues in the A380 production ramp-up, I don't doubt that Airbus was happy to let VS postpone indefinitely to make room for more impatient customers.

Quoting ScottB (Reply 35):The undelivered A340-500 orders for IT were cancelled because the program was being terminated; the same is true of the FX and 5X orders for the A380F.

Which might imply that the VS A380 orders will sit on the books till the A380 program is terminated, which even in my pessimistic mind would not be for many, many years, which will mean countless questions here on a.net. I hope the DLJV gives VS lots of income, but one wonders if it's enough to be going out and taking up A380s for quite a long time.

Quoting xjramper (Reply 27):Au contraire, you have to know the definition of what actually happened in order of how to appropriately respond to the question at hand.

If DL acquired VS, then DL would be calling the shots, not VS/SRB, therefore the A380 would almost be placed on the back burner or changed as DL's model doesn't require that type of aircraft in their fleet. Look at the 787 order that NW had on order prior to the merger back in 2007. DL has no intention of bringing that aircraft into the fleet, since they deferred the order again until closer to 2020. Same would apply to the A380, albeit in a different capacity (no pun intended).

But since there hasn't been a change of leadership or ownership, and has been stated above, VS has a bunch of money invested in the purchase of A380s. The only thing that has changed will be the addition of joint DL and VS flight numbers and reciprocal frequent flyer benefits.

Ok, so we wont just let it go then. Why don't you post one more time and just try to keep this thread off topic. I don't think your doing a good enough job.

Quoting Revelation (Reply 33):Ok, should have said "many" or some such. Their wiki page has their fleet at 31 Airbus vs 13 744s, but I'm sure yourself or someone else will come along and correct me if I'm wrong!

???
I'm not sure why we have to go through this seemingly perennial charade.

Airbus are legally obliged to retain the order until the legalities of cancelling it are properly followed through - you know, like the return of deposits, cancellation charges, litigation etc.
Airbus can't cancel the orders. Only the customer can.
When Airbus canned the old" A350 and replaced it with the new one, the last "old" A350 orders took 3 or 4 years to be worked out.
You'll have to deal with it, I'm afraid

IMHO i dont think Virgin Atlantic would ever take delivery of any short haul airliners. With the Virgin Atlantic Group in Place, there is no need for it, each airline in the group has built up their own fleets to suit the needs of where the airlines operate. However Virgin still wants the A380, they put off delivery for a few years to prove to the Airlines that they could handle it. Delta owns 49% of it, and Delta may have a more say so in whether or not they take delivery of it, but Delta has no physical control of the Airline. But In all honesty, i dont this this Acquisition changes the A380 prospects of the Airline. 2014 is still 2 years away and we have yet to see what the economy will bring us.

Quoting Deltal1011man (Reply 37):Ok, so we wont just let it go then. Why don't you post one more time and just try to keep this thread off topic. I don't think your doing a good enough job.

Maybe I'm mis-reading this from the OP, but tell me how what I wrote is off topic.

Quoting TeamInTheSky (Thread starter):Sorry for another DLVS acquisition thread. Moderators please delete if necessary. However, it has long been speculated on here that it was highly unlikely that VS (like IT) would ever take the A380's they had on order. The passenger numbers were never there to support that capacity.

However, if the JV deal between DL and VS gets done and dusted, is it now more likely that VS might actually take those planes?

Airbus (or any mfg group) can cancel an order if the receiving party doesn't oblige by their end of the contract. It's mainly a tit-for-tat in this situation, as Airbus (and boeing) had production delays, meaning the mfg also broke the contract. It's been an eye opening experience for those who are new to this arena as neither mfg group stood up to their delivery dates.

Quoting KaiTak747 (Reply 29):I think the fact that DL has acquired 49% of VS is irrelevant to the A380 question. DL would like VS to be profitable, and twins are far less of a risk than the A380.

The facts on just one route
........that Delta bring 29 flights into EWR with huge quantity of corporates
........VS o/d demand currently requires a daily 744 configured as 44 32 344 and a 346
........EWR-LHR traffic from DL feed is currently split 3 ways and will now be 100% VS
And this in no way has any relevance to the size of VS equipment in the future?

I must be missing something (compared to multiple frequency 788s) CASM leadership combined with best product doesn't seem the most risky strategy (I'm not saying it's the best strategy but I would not describe it as high risk more as a very safe money spinner)

There are lots of different daily combinations to right size route e.g. 388 + 767 is not much more then 744 + 346 and VSDL now have more flexibility.

In the modern outsourced MRO environment the cost of a small fleet doesn't have to be crippling.